Tsurreal: Prices may go down more than 15%

So a new Fitch report says real estate prices in Vancouver are overvalued by 26%.

They expect prices to drop about 15% in the next few years.

Somewhat suprisingly Tsur Sommerville agrees, prices are coming down and it all depends on interest rates:

“A lot depends on where interest rates go over the next few years,” explains Sommerville. “[If] interest rates three, four, five years from now are substantially higher than what they are now then housing prices will correct.”

Sommerville adds local home values could drop even more than the 15 per cent predicted by Fitch.

“If there was to be a correction, you might expect to see a bigger correction in house prices than in condos,” he explains.

So why would anyone buy now?

Well there’s this:

“One thing that I find striking, though is that [with] current interest rates prices, make some sense, when compared to rents,”

Some sense? Ok, sure, but what kind of sense? Good sense, common sense or non-sense?

I’m sure you can find your own examples, but a quick scan of craigslist will give you real easy rent / purchase comparisons.

Here’s one for the Hudson downtown, a two level loft.

Buy it for $610,000 or rent it (a slightly larger version) for $2300 / month.

A quick mortgage calculator says 5% down (You’re not using that $30k for anything else are you?) at 2.99% rate leaves you with a monthly payment of $2,829 without maintenance, strata, etc.

So some sense? Sure, but maybe not good sense.

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JD
Member
JD

VMD those battle maps are amazing. Nice work!

VMD
Member

Battle of Vancouver: SFH Front – Feb 2013 Battle Update:

– As predicted in January, Bear Forces successfully invaded Port Coquitlam and N Delta.

– Charged with triumphant spirit, Bear Forces also liberated West Vancouver, Port Moody, and Tsawwassen.

– The following Bull Territories are facing imminent defeat: Coquitlam & Cloverdale

– Coquitlam is where the Last Stand of Bull Forces in REBGV takes place. The Bulls are down to the Very Last tank battalion. If they are defeated, the Bulls will be chased South of Fraser River, and possibly soon, South of the Border.

Link #1: http://vancouverpeak.com/Thread-Battle-of-Vancouver-SFH?pid=620#pid620

Link #2: (smaller pics, good for seeing 5-month trend)

HappyRenter
Guest
HappyRenter

I apologize from every body for dragging on this subject and this is my last post regarding this matter.
@ Carioca Canuck
4 Family Members
10 Accounts(5 Banks + 5 Credit Unions)
52 Weeks
$500 per week per account
4x10x52x$500 = $1,040,000

Q
Guest
Q

TD Canada Trust is still offering cash-back mortgages. I thought this wasn’t allowed.

http://www.tdcanadatrust.com/products-services/banking/mortgages/view-all-our-mortgages/5-cashback.jsp

Piklishi
Guest
Piklishi

For real? Tsur said that? Omg the biggest bull finally is defeated and can’t hide anymore. This is a historical day for VCI, should celebrate it.

Btw vmd u have done a very good job on the maps, you might get a call from tsur asking permit ion to use those as an excample for his classes.

Anonymous
Guest
Anonymous

Nice play on the name! TSurreal for Tsuriel.

Short Definition: Zurie

From tsuwr and ‘el; rock of God; Tsuriel, an Israelite — Zuriel.

see HEBREW tsuwr

see HEBREW ‘el

Many Franks
Guest
Many Franks

Meanwhile, Mark Carney keeps rates at 1%. It’s been 2 1/2 years since the last change and Mark is still jabbering about “removing the considerable monetary policy stimulus currently in place.” Eventually. In Mark We Trust.

Harry Wang
Guest
Harry Wang

Did ANYONE see Global or CTV do a news story on the February real estate numbers? The only thing I saw on Monday was a story about how BMO’s record low mortgage rate was going to revive the housing market.

Makaya
Member
Makaya

@Many Franks

It’s alright, there’s no Real Estate bubble any more according to these goofs

In a revised statement on its policy intentions, the central bank indicated that it thinks the risk of a housing bubble has passed, dropping language that said future interest-rate increases might be needed to dissuade households from piling on debt.

http://www.theglobeandmail.com/report-on-business/economy/battle-of-housing-bubble-won-carney-focuses-on-economic-growth/article9336355/

Anonymous
Guest
Anonymous

Let’s face it. Interest rates are not going up for a very long time.

If that’s the case, we need 30 year mortgages here to. Let’s level the playing field. But gawd, what an advantage in life those have that bought 10 years ago. Wow!

Monthly carrying costs dictate prices more than income to price ratios when looking at it historically.

vangrl
Member
vangrl

ugh whe is the chronologically thing going to be fixed? clicking it brings me up to a poverty train post from a long time ago, and i hate reading posts backwards.

Why are they backwards anyway? wouldn’t it make more sense to start with #1?

p.s Love this site:)

Many Franks
Guest
Many Franks

@Anonymous: I’m not holding my breath for rate increases either, but as the Canadian dollar continues to tick downwards, I’d be getting nervous if I had a lot of leverage. The banks will be thinking along the same lines.

Monthly carrying costs dictate prices more than income to price ratios when looking at it historically.

You’re free to focus on any insane justification you like, but don’t expect it to have much of an impact on reality.

@Makaya: Don’t make me re-post that tired old “Mission Accomplished” image again…

asalvari1
Guest
asalvari1

@vangirl

its easy, just add the “/all-comments” at the end of the url you have in your browser..

they will fix it, just give them space to breathe.. not sure what was the issue, but certainly they have burned quite a bit of their free time to make this site come back alive.

Thank you Pope/Admin(s) for the hard work and I hope that adds are giving back some of our love..

Anonymous
Guest
Anonymous

omg, people fart and bears and smell it happily.

Democrass
Guest
Democrass
Look at this place from http://vancouverpricedrop.wordpress.com/. Last year it was $1.2M this year it is $838K. That is a nice bear market ass-kicking. #3 ) Address:10920 MORTFIELD RD, South Arm, Richmond May 19, 2011 V889052 $1,186,000 $0 0% July 05, 2011 V889052 $1,148,000 $-38,000 -3% August 12, 2011 V889052 removed after 85 days October 05, 2012 V975246 $999,800 $-186,200 -16% January 01, 2013 V975246 removed after 88 days January 25, 2013 V986860 $998,000 $-188,000 -16% February 28, 2013 V986860 $838,000 $-348,000 -29% Current Days on Market: 153 (0.42years) Current ‘Official’ Days on Market: 41 2012 Assessment: $971,000 2011 Assessment: $954,800 Desperation Score: 19.4 You will just fall in love with this home once you step in. Solidly built and nicely updated in a park-like setting of this9162 sq ft lot. 6 Bedrooms, 3 baths, 2732 sq ft interior. Kitchen, bathrooms,… Read more »
VCI Admin
Admin

@vangrl: Should be fixed now, just one of those things 😀

BTW: we’re considering going to a full page comment stream instead of paginated comments. This might help memory load on the server and hopefully give us a chance to get the @reply feature working again.

Any reader opinions on chronological order? Some people like to have the newest comments at the top, some like to scroll down and have them in chronological order.

Democrass
Guest
Democrass

“But gawd, what an advantage in life those have that bought 10 years ago. Wow!”

No kidding. But what about the people that bought five years ago? You probably agree that they will be screwed. And you probably also agree with all the bears who have been saying don’t buy for the last 5-6 years.

N
Guest
N

Pope,

Many thanks for all you do!

One page of chronological posts would be my choice. I don’t find that to be any slower loading than the paginated version, and it’s much easier to find my place that way. Plus, at the risk of sounding very silly, if I load the “newest at the top” view and scroll down so I can start reading where I left off, I sometimes see PaulB’s numbers in the process, which is kind of a spoiler. I like the suspense!

Short'em High
Guest
Short'em High
@Many Franks Says: Mark Carney = Inanimate Carbon Rod LOL! Carney’s low risk career path is masterful. Tsur could learn a thing or two. In retrospect, the fluid response of the market to economic data has already done some heavy lifting by whacking the capital of highly leverage RE speculators down by whatever multiple they foolishly dared through dollar devaluation on top of the numerical price decline. The other thing to consider is that Carney has seen this Friday’s unemployment number and factored another fluid market response into today’s decision to keep rates flat longer (rather than cutting). Expect a higher unemployment number on Friday. Statscan is going to do some more of Carney’s heavy lifting in the markets by cutting the Canadian dollar further. To the RE ponzi dunces waiting for “the memo” to sell, there it is. List… Read more »
Ralph Cramdown
Guest
Ralph Cramdown

OK, if you like the oldest comment at the top, vote me up.
If you like the oldest comment at the bottom, vote me down.

HAM
Guest
HAM

Is Paul B a bearish realtor? Just wondering because this is a bear blog and he seems to be here often.

Thanks!

RaggedyRenter
Member
RaggedyRenter

This underlines Canada’s spot in the world as THE safe haven for criminals and hot money and our collective gullibility. Hot One Percent Money coming.

http://news.nationalpost.com/2013/03/06/biker-let-into-canada-after-telling-officials-that-his-1-patch-stands-for-honesty-openness-and-respect/

vangrl
Member
vangrl

“I sometimes see PaulB’s numbers in the process, which is kind of a spoiler. I like the suspense!”

haha that’s awesome, I feel exactly the same way, i like to scroll slowly down in chronological order till i can peak at Paul’s post:)

Vote Down The Facts
Guest
Vote Down The Facts

“But what about the people that bought five years ago? You probably agree that they will be screwed.”

If somebody bought a place for the longterm, that they can afford to make the payments on even if interest rates rise, are happy living in, then how are they screwed? Sure, they won’t have made the soundest financial decision but they’re hardly screwed.

The people who are screwed are those who’ll either need to sell, or can’t afford an interest rate hike.

Many Franks
Guest
Many Franks

@Vote Down The Facts:

Thanks for your clarification. In other words:
– Anyone who is forced to sell who bought in the last 5 years is screwed.
– Anyone who can’t afford an interest rate hike is screwed.
– Anyone who bought short-term is screwed.
– Anyone who doesn’t like where they’re living, who bought recently, is probably trapped.
– Anyone else who bought in the last 5 years, if they aren’t screwed, “won’t have made the soundest financial decision.”

Gooble gobble one of us!

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